UPDATE 3-G8 pledges action on tax evasion, few concrete measures

Reuters Staff

4 Min Read

By William Schomberg and Jeff Mason

ENNISKILLEN, Northern Ireland, June 18 (Reuters) - The world’s rich economies said they would take a tougher stance on fighting money laundering and tax evasion but promised little in the way of specific new action at the end of a two-day summit on Tuesday.

The Group of Eight leaders signed up for a string of aims including improved transparency about who owns shell companies and more information-sharing between tax authorities.

British Prime Minister David Cameron has sought to clamp down on secret flows of money, making it a centrepiece of his presidency of the G8 this year.

But the communique did not contain a firm pledge to create registers of the “beneficial” - or true - owners of companies that would be available to tax authorities and law enforcement.

That was something Britain committed to on Saturday and campaigners had hoped other G8 countries would follow suit.

“If all of these promises become reality, this could have an enormous impact on tackling one of the greatest scandals of our time. But there is a long way to go,” said Murray Worthy, tax campaigner at the British anti-poverty charity War on Want.

Campaigners say illicit money flows out of developing countries are double the amount of development aid going in.

Under pressure from austerity-weary voters, lawmakers have focused increasingly on tax dodges. More than 50 countries have agreed to a new protocol on tax data sharing since 2011.

Cameron said his proposal that firms report profits on a country-by-country basis could help expose corporate profit shifting into low-tax states.

U.S. Senator Carl Levin, a long-time critic of such activities, welcomed the proposal. Business groups said they could support it providing the amount of information they were forced to give authorities was not too detailed.

ACTION PLANS

The G8 leaders, meeting in Northern Ireland, said their governments would draw up action plans for collecting and sharing information on who really owns companies, making it harder to set up Russian-doll type structures.

The United States pledged to keep on pressing for legislation to cut down on the criminal use of shell companies.

“The credibility of this depends on the ability of the White House to advance legislation,” said Gavin Hayman, director of campaigns at anti-corruption group Global Witness.

The United States pointed out it was planning to require banks to understand who their customers actually are and provide information for law enforcement and tax authorities.

A frequent critic of tax havens, the United States has come under fire from campaigners for the low transparency requirements around ownership of corporate entities registered in some U.S. states such as Delaware.

COUNTRY-BY-COUNTRY

Tax campaigners had called for companies to be forced to make public their profits, revenues and tax payments for every country where they operate. That could deter accountants from building contrived arrangements to keep tax low.

Business groups remained against such a move.

“We continue to have real doubts about the utility of any rules requiring the release of vast amounts of raw data to the public,” Andrew Wilson, UK Director of the International Chamber of Commerce said in a statement.

The G8 leaders also called on the Organisation for Economic Co-operation and Development (OECD), which advises rich nations on economic policies, to come up with a way that could require multinational corporations to report profits and tax payments to authorities on a country-by-country basis

Some developing nations complain they struggle to get information about companies’ operations in other countries, so the measure could help them cut profit shifting.

The OECD is working on a broader prorgamme to tackle tax avoidance under the auspices of the Group of 20 comprising the leading developed and developing economies. It is due to submit a report with recommendations to a G20 meeting next month.